3. OVERVIEW - I
IBT: “[P]rivate business transactions that are international in Character”
Private:
“[T]ransactions that affect the commercial, economic, and business interests of private or
nongovernmental ·parties.”
International when:
“[P]arties have their places of business in different nation-states;
“[T]ransactions involve the movement of goods, services, capital, or technology across the boundaries
of different nations; or
[T]ransactions between parties of one state have direct effect in a different state.”
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4. OVERVIEW - II
Categorizing IBT (based on extent of penetration in international markets):
Export-import transaction
Agents and distributorship agreements
Licensing and franchising
Joint ventures and FDI
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5. OVERVIEW - III
Risk is inherent in any business transaction. International business is even riskier =>
level and sources of risk increase/multiply
Communication
Transportation concerns
Regulation by more than one governmental source:
the law applicable to a given matter,
the stability of the political structures determining applicable rules, and
duties, quotas and licensing requirements requires to complete a transaction
Currency fluctuations
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6. OVERVIEW - IV
The role of a transnational transactions lawyer:
Identify sources of increased risk,
Identify the legal rules applicable to the risks so identified, and
Find ways in which parties to a transaction can reduce, reallocate and eliminate risks.
How to reduce, reallocate and eliminate risks?
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7. OVERVIEW - V
How to deal with increased risk of international transactions?
1. Institutional protection
National and international legal framework within which a transaction occurs;
Examples: customary international law (compensation for expropriation) and BITS
2. Purchased protection
Commercial letter of credit; insurance against certain commercial risks
government-provided insurance
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8. OVERVIEW - VI
How to deal with increased risk of international transactions?
3. Negotiated protection
protections negotiated with either the host country or its nationals involved in the transaction.
Example: A choice of law clause providing a well-developed but neutral source of interpretation and application of the contract
terms.
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9. LOGISTICS - I
Readings
Textbook: Daniel C.K. Chow and Thomas J. Shoenbaum,
International Business Transactions: Problems, Cases,
and Materials (New York: Aspen Publishers 2005).
All required readings (including lecture slides) are part
of the exam.
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10. LOGISTICS - II
Lectures:
Monday – Friday: 09:00-12:30 hrs.
Assessment:
Written exam (50%),
Exam type: Closed book?
Exam date?
Research paper (30%), and
Format: Introduction; review of literature; analysis; conclusion; and bibliography.
Due date?
Class participation (20%).
Active and meaningful participation
Discussion of review problems in groups
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11. IBT RESOURCES – I
Treatises:
Daniel C.K. Chow and Thomas J. Schoenbaum, INTERNATIONAL BUSINESS TRANSACTIONS:
PROBLEMS, CASES, AND MATERIALS (3d ed. 2015).
Ralph H. Folsom, INTERNATIONAL BUSINESS TRANSACTIONS 2017-2018.
Ved P. Nanda & Ralph B. Lake, THE LAW OF TRANSNATIONAL BUSINESS TRANSACTIONS (2017).
CORPORATE COUNSEL’S GUIDE TO DOCUMENTING INTERNATIONAL TRANSACTIONS (2017).
Ralph H. Folsom et al., PRINCIPLES OF INTERNATIONAL BUSINESS TRANSACTIONS (2017).
Ralph H. Folsom et al., INTERNATIONAL BUSINESS TRANSACTIONS IN A NUTSHELL (2016).
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12. IBT RESOURCES – II
Reference works:
Max Planck Encyclopaedia of Public International Law
Parry and Grant Encyclopaedic Dictionary of International Law
ASIL Electronic Resource Guides (e-RGs), https://www.asil.org/resources/electronic-resource-guide-erg.
Don Ford, Private International Law, e-RG,
https://www.asil.org/sites/default/files/ERG_PRIVATE_INT.pdf.
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13. IBT RESOURCES – III
Selected IBT Journals:
Asper Review of International Business and Trade Law (Canada)
Business Law International (UK): www.ibanet.org/Publications/business_law_international.aspx.
Journal of International Business & Law: www.hofstrajibl.org/articles-archive/
Finding Guides for Foreign & International Law
Globalex: www.nyulawglobal.org/globalex/
WorldLII – International Law Library: www.worldlii.org/int/special/ihl/
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15. IBT RESOURCES – V
Organisations:
World Trade Organization: www.wto.org
UNCITRAL: www.uncitral.org/uncitral/
UNIDROIT: www.unidroit.org
International Chamber of Commerce (ICC): www.iccwbo.org/
International Bar Association: www.ibanet.org
World Intellectual Property Organization (WIPO): www.wipo.int/
Keeping up to date
International Economic Law and Policy Blog: http://worldtradelaw.typepad.com/ielpblog/
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16. INTRODUCTION TO IBT
• Trends in International trade
and investment
• The legal framework for IBT
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17. TRENDS IN TRADE AND INVESTMENT – I
17
Global trade and investment flows, 1994-2014
Source: Gestrin (2016) (references omitted)
18. TRENDS IN TRADE AND INVESTMENT – II
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Foreign direct investment inflows by broad country groupings
Source: Michael Gestrin 2016 (references omitted)
19. TRENDS IN TRADE AND INVESTMENT – III
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Source: Ortiz-Ospina and Roser (2018) (references omitted)
20. TRENDS IN TRADE AND INVESTMENT – V
What explains the growth in globalization of international business?
Advance in technology (especially in transportation and in communications)
Governments are removing barriers to international business restrictions.
Institutions provide services to ease the conduct of international business.
Competition has become more global.
Improved political relations among some major economic powers
Cross-national cooperation and agreements.
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21. TRENDS IN TRADE AND INVESTMENT – VI
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Source: Ortiz-Ospina and Roser (2018) (references omitted)
22. THE LEGAL FRAMEWORK FOR IBT – I
1. Private International Law
What substantive law or laws apply to an international business transaction?
It helps to determine the applicable substantive law where:
the parties to a transaction had not made an effective choice of law In their contract, or
The transaction isn’t governed by a superseding law such as an international treaty
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23. THE LEGAL FRAMEWORK FOR IBT – II
1. Private International Law
Concern: inherent unpredictability (NB: the task of the an International Transactions Lawyer is reducing
uncertainty)
The international community attempted to address the uncertainty through international conventions =>
The Hague Conference on Private International Law in 1893
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24. THE LEGAL FRAMEWORK FOR IBT – III
2. The (New) Lex Mercatoria
Body of commercial laws b/n the 5th and 15th Centuries in Europe.
“[D]escribes the totality of actors, usages, organizational techniques, and guiding principles that
animate private, transnational trading relations, and it refers to the body of substantive law and
dispute resolution procedures that govern these relations.” (Sweet 2006: 629)
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25. THE LEGAL FRAMEWORK FOR IBT – IV
2. The (New) Lex Mercatoria
Functional logic: “it enabled merchants to escape conflicts between various local customs and rules, and
to avoid submitting to the authority of judges attached to pre-existing jurisdictions (the courts of feudal
manors, city states, local gilds, the Church).” (Sweet 2006: 629)
It was ‘voluntarily produced, voluntarily adjudicated, and voluntarily enforced’ (as cited in Sweet
2006: 629)
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26. THE LEGAL FRAMEWORK FOR IBT – V
2. The (New) Lex Mercatoria
Towards the end of the 15th century, the Lex Mercatoria gave way to national commercial laws.
Most of the legal principles were, however, borrowed from the former.
This brought about the loss of autonomy of merchant courts and their substitution by state courts.
Modern commercial laws too owe much of their substances to the Lex Mercatoria (negotiable
instruments, bills of lading, bankruptcy etc).
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27. THE LEGAL FRAMEWORK FOR IBT – VI
2. The (New) Lex Mercatoria
The last 50 years saw the emergence of a spontaneously generated body or rules and procedures by
the international community in the shadow of national legal orders - called the New Lex Mercatoria.
Institution building has proceeded at two fronts:
Standardization and Unification of contracts and contract laws.
A robust system of private commercial dispute mechanisms and entities.
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28. THE LEGAL FRAMEWORK FOR IBT – VII
2. The (New) Lex Mercatoria
Standardization and Unification of contracts and contract laws.
The UNIDROIT Principles of International Commercial contracts.
Principles of European Contract Law (the PECL).
The United Nations Convention on the International Sale of Goods (CISG)
INCOTERMS of the International Chamber of Commerce (the ICC).
The Uniform Commercial Code in the USA.
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29. THE LEGAL FRAMEWORK FOR IBT – VIII
2. The (New) Lex Mercatoria
A robust system of private commercial dispute mechanisms and entities.
trends towards third party dispute resolution methods that are outside courts and thereby beyond the reach of local laws.
Increasing recognition by the trading community of these rules as part of the customary law governing their relations – hence the
new Lex Mercatoria.
The Convention on the Recognition and Enforcement of Foreign Arbitral Award
UNCITRAL Model Law on International Commercial Arbitration (1985)
Convention on the Settlement of Investment Disputes between States and Nationals of other States (ICSID of the World Bank,
1965)
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30. THE LEGAL FRAMEWORK FOR IBT – IX
2. The (New) Lex Mercatoria
Issues of legitimacy and transparency
A power shift from state actors to private actors
What role for Private International Law in the age of New Lex Mercatoria?
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31. THE LEGAL FRAMEWORK FOR IBT – X
International Forums and Institutions
1. The United Nations Commission on Int’l Trade Law (UNCITRAL)
With increase in world trade in the 1960s, the need for a global set of standards and rules harmonizing national and regional
regulations then in force became apparent;
The United Nations General Assembly established the UNCITRAL by Resolution 2205 (XXI) of 17 December 1966 "to promote the
progressive harmonization and unification of international trade law.”
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32. THE LEGAL FRAMEWORK FOR IBT – XI
International Forums and Institutions
1. The United Nations Commission on Int’l Trade Law (UNCITRAL)
Carries out its work at annual sessions held alternately in New York City and Vienna.
prepares and/or promotes the codification and wider acceptance of international trade terms, provisions, customs and practice
Convention on Contracts for the International Sale of Goods 1980;
Convention on the Carriage of Goods by Sea 1978 (the Hamburg Rules)
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33. THE LEGAL FRAMEWORK FOR IBT – XII
International Forums and Institutions
1. The United Nations Commission on Int’l Trade Law (UNCITRAL)
promotes wider participation in existing int’l conventions and wider acceptance of existing model and uniform laws
New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958
Drafts model laws/legal rules that gov’ts/ private parties can incorporate
UNCITRAL Model Law on Procurement of Goods, Construction and Services 1994
UNCITRAL Arbitration Rules 1976
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34. THE LEGAL FRAMEWORK FOR IBT – XIII
International Forums and Institutions
2. The International Institute for the Unification of Private Law (UNIDROIT)
an independent intergovernmental organization established in 1940 with a principal mission of examining ways and means of
harmonizing and coordinating private laws of member states.
Many conventions have been drawn up by UNIDROIT but the most important one is the UNDROIT Principles of International
Commercial Contracts with the objective of establishing a balanced set of rues designed for use at a global level.
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35. THE LEGAL FRAMEWORK FOR IBT – XIV
International Forums and Institutions
2. The International Institute for the Unification of Private Law (UNIDROIT)
The UNDROIT Principles of International Commercial Contracts 1994
Aims to establish a balanced set of rues governing commercial contracts (not just sale of goods);
Not binding; reflects concepts of contract law found in almost all legal systems of the world and are designed to meet the
needs of int’l trade.
Neither a convention nor a model law; applies only when the parties to a transaction agree to incorporate them into their
contracts and to the extent they are not incompatible with the applicable law, if there is one.
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36. THE LEGAL FRAMEWORK FOR IBT – XV
International Forums and Institutions
3. The International Chamber of Commerce (ICC)
A private not-for-profit organization established in 1919; constituted of national chambers of commerce, trade associations, and
companies
Represents the interests of private business and industry before national governments and international organizations.
Creates uniform rules and standards for use in international commerce
Incoterms (from International Commercial Terms)
Uniform Customs and Practice for Documentary Credits (UCP),
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37. THE LEGAL FRAMEWORK FOR IBT – XVI
Categories of IBL
International Law (TL and CIL)
Supranational Law
Uniform codes
Domestic law
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38. THE LEGAL FRAMEWORK FOR IBT – XVII
Relationship of Sources of IL to Domestic Law
status of international treaties in the Ethiopian legal system
Self-executing and non-self executing
The issue of customary international law
Why bother?
39
